Oil Prices Climb on China Demand Hopes and Tighter European Winter Supply
Oil prices saw a boost on Tuesday as traders looked towards increased demand in China and the potential for a tighter supply situation in Europe during the upcoming winter months.
Brent crude futures enjoyed a gain of 51 cents, or 0.71%, to reach $72.64 per barrel at 10:43 am CST (1643 GMT). West Texas Intermediate also saw an increase, rising by 59 cents, or 0.86%, hitting $68.97 per barrel. Both benchmarks recorded a rise of over 1% the day before.
This upward movement was bolstered by reports that China is contemplating a shift towards a "appropriately loose" monetary policy in 2025 as a strategy to invigorate economic growth. This would mark the first easing of China’s stance in 14 years, although specific details remain limited.
Chinese crude imports also registered year-on-year growth for the first time in seven months, showing a jump profile in November against the figures registered for the same period last year.
However, Tamas Varga, an expert from oil broker PVM, cautioned that "the increase was more a function of stockpiling than demand improvement."
Varga emphasized that "the economy will only be stimulated by improving consumer sentiment and spending, by a rise in domestic aggregate demand echoed in a healthy increase in consumer inflation."
Hedge funds were observed actively purchasing oil, seemingly driven by speculation about potential winter demandいきます. Phil Flynn, a senior analyst at Price Futures Group.
"Hedge funds are starting to buy on tightness of supply in European markets this winter," Flynn noted.
The political landscape in Syria also played a role, as rebels worked towards establishing a government and restoring order following the removal of President Bashar al-Assad. The country’s banks and oil sector were expected to resume operations on Tuesday.
Strategist Yeap Jun Rong from IG noted that "the tensions in the Middle East seem contained, which led market participants to price for potentially low risks of a wider regional spillover leading to significant oil supply disruption."
Although Syria itself is not a major oil-producing nation, its strategic position and historical close ties with both Russia and Iran give it geopolitical significance in the energy sector.
Looking forward, the anticipated quarter-percentage-point reduction in interest rates by the U.S. Federal Reserve at the end of its meeting on December 17-18 could amplify oil demand in the world’s largest economy.
However, industry experts point out that traders are closely monitoring this week’s inflation data, as positive results could undermine the signal for a reduction in interest rates.
